SME Capital Forced to Hand Over Hudson Yards Condo Building to Residents

Private investment firm SME Capital Ventures is handing ownership of 441 West 37th Street to the condominium board after an investigation by the New York Attorney General’s office.

SME acquired the building out of foreclosure in 2023. It then failed to pay bills related to the Hudson Yards property and neglected safety violations, leading to a settlement to pay $700,000, according to Attorney General Letitia James.

Built in 2020 by Levi Balkany, the nine-unit building went into foreclosure in 2023.  SME never reported to the state that it was the winning bidder in the auction and never acknowledged that it owned the building, leaving residents to pick up the tab for things like a new $15,824 certificate of occupancy, according to the AG.

Some of the units were rented out while awaiting buyers, including 35 formerly homeless people who were ousted around the time SME took control of the building, according to The Real Deal.

“Private equity firms do not get to pick and choose which laws apply to them,” James said in a statement. “When this company took control of a Manhattan condo building, it took on real legal responsibilities to the homeowners who lived there. For two years, SME Capital dodged those duties while still collecting rent checks. My office will keep holding these firms accountable when they put profits over New Yorkers’ safety.” 

Balkany could not be reached for comment.

SME’s Eran Silverberg signed the settlement agreement, but the firm’s attorney Ken Breen attested that the building’s problems all boil down to developer failing in his own responsibilities to the residents of the building, leaving SME to “inherited a building that had been left in regulatory limbo.”

“We chose to resolve this matter because the homeowners at 441 West 37th Street had already suffered enough as a result of Mr. Balkany’s conduct,” Breen said in a statement. “Under the terms of the settlement, SME Capital will make payments to cover the building’s unpaid obligations, repair its fire safety systems, obtain a permanent certificate of occupancy, and turn over control of the condominium board to the homeowners, which Mr. Balkany was supposed to do and never did.”

The New York City Fire Department also issued citations for failure to file paperwork regarding the fire safety systems as well as other health and safety violations, totaling about $140,000 in unpaid fines, the attorney general noted. 

There were also $523,000 in unpaid monthly costs.

Mark Hallum can be reached at mhallum@commercialobserver.com.